One year on

EDITORIAL:

Editor: Serena Lim serenalim@quartzltd.com

+44 (0)1737 855066

Assistant Editor: Gill Langham gilllangham@quartzltd.com

+44 (0)1737 855157

SALES:

Sales Manager: Mark Winthrop-Wallace markww@quartzltd.com

+44 (0)1737 855114

Sales Consultant: Anita Revis anitarevis@quartzltd.com

+44 (0)1737 855068

PRODUCTION:

Production Editor: Carol Baird carolbaird@quartzltd.com

CORPORATE:

Managing Director: Tony Crinion tonycrinion@quartzltd.com

+44 (0)1737 855164

SUBSCRIPTIONS: Jack Homewood subscriptions@quartzltd.com

+44 (0)1737 855028

Subscriptions, Quartz House, 20 Clarendon Road, Redhill, Surrey RH1 1QX, UK

© 2023, Quartz Business Media ISSN 0267-8853

WWW.OFIMAGAZINE.COM

A member of FOSFA

Oils & Fats International (USPS No: 020-747) is published eight times/year by Quartz Business Media Ltd and distributed in the USA by DSW, 75 Aberdeen Road, Emigsville PA 17318-0437. Periodicals postage paid at Emigsville, PA.

POSTMASTER: Send address changes to Oils & Fats c/o PO Box 437, Emigsville, PA 17318-0437

Published by Quartz Business Media Ltd Quartz House, 20 Clarendon Road, Redhill, Surrey RH1 1QX, UK oilsandfats@quartzltd.com

+44 (0)1737 855000

Printed

Just days before the Black Sea Grain Initiative allowing grain and food exports from Ukraine’s Black Sea ports was due to be renewed on 18 March, Russia agreed to an extension, but only for 60 days and not the 120 expected when the initiative was signed last July (see p4).

While some extension is better than none, 60 days does not allow for much forward planning, nor does it address the delays in vessel inspections in Istanbul, which Ukraine blames on Russia. The inspection rate has fallen to around 2.5 ships/day, with some vessels waiting two to five weeks to be cleared and a backlog of about 100 ships.

For Ukrainian grain and oilseed production, the outlook is also very uncertain.

The country harvested around 57M tonnes of grains and 10M tonnes of sunflowerseed in 2022, a third lower than in 2021, with production expected to fall further this year by more than 30%, according to the head of the Ukrainian Agri Council. This is due to farmers sowing less winter crops, with the upcoming spring sowing campaign expected to be a big challenge.

Ukraine has lost some 3.8M ha of farmland to Russia and a further 3.8M ha cannot be sown due to land mines or proximity to the frontline, World Grain reported Ukrainian Club of Agricultural Business (UCAB) analyst Svitlana Lytvyn as saying. As well as the loss of physical land, farmers face difficulties exporting their crops, expensive logistics, destroyed farms and machinery, labour shortages and massive liquidity problems, which will result in minimal use of fertilisers and crop protection products affecting yields.

Russia, meanwhile, is set to overtake Ukraine as the world’s leading sunflower oil exporter, according to a 3 February Reuters report. Before the war, sunflower oil was Ukraine’s highest grossing agricultural export, valued at US$6.4bn in calendar year 2021.

However, in the 2022/2023 marketing year, the US Department of Agriculture projects that Russia will export 3.7M tonnes of sunflower oil against Ukraine’s 3.65M tonnes which, for Ukraine, is 45% down from the previous year. This gives Russia a 35% market share compared with Ukraine’s 34%. Three years ago, the shares were 28% and 50% respectively. Ukraine is expected to export some 2.45M tonnes of sunflowerseed – 20 times its pre-war volumes – but this is due to the closure of its crushing and processing facilities. Russia’s sunflowerseed crop, meanwhile, is forecast at a record 16.5M tonnes.

Russia has made extending the Black Sea export corridor dependent on the removal of Western restrictions which it says are hampering its food and fertiliser exports. Its sea trade across containers, tankers, dry bulk and gas has also continued despite a multitude of EU sanctions, with cargoes either taking a longer route or loading on a ‘shadow fleet’ of vessels operating outside Western insurance and financial systems, according to a 24 February report by Freight Waves

With Russian trade continuing despite sanctions, reports of a possible new Russian offensive, and Ukraine’s farmers facing a host of challenges, the country is still facing a bleak time, despite the resilence of its citizens and industry. One year on from Russia’s invasion on 24 February, we need to be reminded that some 14M people have been displaced; 18M are in need of humanitarian assistance; and more than 100,000 civilians are believed to have been killed – more than 10 times the current official death toll –according to Ukraine’s leading war crimes prosecutor.

Serena Lim, serenalim@quartzltd.com

ARGENTINA/RUSSIA : The United States Department of Agriculture (USDA) has lowered its sunflowerseed production forecasts in the 2022/23 marketing year (MY) for Argentina and Russia, UkrAgroConsult wrote on 10 February.

The USDA sunflowerseed production forecast for the 2022/23 MY was 50.77M globally; 4.4M tonnes for Argentina; 16M tonnes for Russia and 10.4M tonnes for Ukraine. Projected sunflowerseed exports were 200,000 tonnes for Argentina and 2.65M tonnes for Ukraine. The import forecast for the EU was 2.9M tonnes.

RUSSIA: German chemical giant Bayer has said it would continue to supply agricultural products to Russia and was hoping for a swift resolution to what it called a technical delay in the country’s sunflowerseed imports, Reuters reported on 8 February.

“As announced last year, Bayer continues to supply key agricultural products and solutions for farmers in Russia,” Bayer told Reuters “There are temporary delays in sunflowerseed imports. We are hoping for an early resolution and for the timely import of seeds for the upcoming sowing campaign.”

The company’s statement followed a report in the Izvestia newspaper on 7 February, saying Western seed producers had suspended sunflowerseed shipments to Russia and paused customers’ bids for purchases. The report cited letters by Bayer, Swiss agrochemicals group Syngenta and seed firm Nuseed. Russia’s agriculture ministry said it did not see any risks for the 2023 sowing campaign and had already stocked up on what it needed, even if Western suppliers stopped shipments, Izvestia wrote.